Neogen Chemicals Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Neogen Chemicals reported a 9% YoY revenue growth in Q3 FY26, reaching INR 220 crore, alongside a 13% increase in gross profit. However, profitability was impacted by transient costs from the Neogen Ionics ramp-up, fire incident, and higher finance expenses. The company is actively advancing its battery materials strategy through a new JV with Morita and the Pakhajan greenfield project, with significant funding expected from insurance claims, the JV partner, and promoters to support future growth.

Highlights

  • Q3 revenue grew 9% YoY to INR 220 crore, driven by higher volumes in organic and inorganic chemical segments.

  • Gross profit increased 13%, leading to a 150 basis points margin expansion.

  • Neogen Ionics contributed INR 12 crore to the quarter's revenue, scaling the battery chemicals vertical.

  • Successfully concluded a joint venture with Japan's Morita Investment Limited for LiPF6 salt production, with Neogen holding an 80% majority stake and a $20 million investment from Morita.

  • Pakhajan greenfield project is progressing as per schedule, with commercial production for electrolyte targeted for H1 FY27 and electrolyte salts for H2 FY27.

Concerns

  • Q3 EBITDA of INR 32 crore and PAT of INR 4 crore were pressured by transient costs related to Neogen Ionics ramp-up, elevated operational expenses due to a fire incident, interim toll manufacturing setup, and higher finance costs.

  • The timeline for Dahej capacity addition slipped from December 2025 to March 2026 due to design improvements identified during training with Morita.

  • Customer approval cycles for battery materials are lengthy, with meaningful shipments for some customers expected by Q1 FY27, and final site audits for global clients also in Q1 FY27.

Key financials

  1. Revenue ₹220 Cr +9%YoY
  2. Gross Profit Growth 13%
  3. Gross Margin Expansion 150 bps
  4. EBITDA ₹32 Cr
  5. PAT ₹4 Cr
  6. Neogen Ionics Revenue Contribution ₹12 Cr

What they filed

Q1 FY27: revenue up 33.7%, net profit up 70.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue193 201 203 187 209 +8%220 +9%247 +22%250 +34%
EBITDA35 35 36 32 30 −14%32 −9%44 +22%48 +50%
Net profit11 10 2 10 3 −73%4 −60%11 +450%17 +70%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹220 Cr Total
  • Organic Chemical ₹187 Cr 85.0%
  • Inorganic Chemical ₹33 Cr 15.0%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Dahej replacement plant reconstruction
    • Pakhajan greenfield project for electrolyte and electrolyte salts
    Regarding the fire incident, we received INR 83.48 crore in insurance claims till nine months FY26. Accordingly, net claim receivable stands at INR 251.12 crore. We are maintaining a close dialogue with insurance companies to expedite the final settlement of the remaining balance. Concurrently, construction of replacement plant of Dahej is progressing rapidly, with commissioning on track for Q1 FY27. We are confident this new facility will be fully compliant and optimized for enhanced operational efficiency. Our Pakhajan greenfield project is progressing as per schedule, with commercial production for electrolyte targeted for H1 FY27 and electrolyte salts for H2 FY27.
  • Debt Net ₹1,175 Cr
    The net debt that we have today is around INR 680 crore on standalone basis and around INR 1,175 crore on a consolidated basis. Yes, for whatever loans we have in Dahej, let us say if we are completing in Q1, then the first principal repayment will be Q1 of FY28. And in case of Pakhajan, it will be right now say H1. So, if we are saying H1 FY27 is when it starts, then H1 FY28 would be the equivalent first repayment after that. So, one year from the start of the plant. From the SCOD.
  • M&A Neogen Morita New Materials Limited Joint venture · Closed · Consideration ₹[object Object] (cash)

    To produce and sell LiPF6 salt globally, integrating 30 years of proven Japanese technology and accelerating international customer approvals.

    Neogen will hold an 80% majority stake, supported by a $20 million investment from Morita for the rest of the stake.

    We have successfully concluded a joint venture with Japan's Morita Investment Limited to produce and sell LiPF6 salt globally. Neogen will hold an 80% majority stake in the new entity - Neogen Morita New Materials Limited - supported by a $ 20 million investment from our partner for the rest of the stake.
  • Liquidity Liquidity disclosed Expected funds from insurance claims, JV partner, and promoter preferential issue will provide significant liquidity for growth initiatives and debt reduction.
    There are four non-business flows which are, non-operational flows which are significant, which are coming, let me share with you that. On the insurance front, we are very close to getting another INR 60 crore as a second interim payment against the rebuilding of Dahej plant, against the capex loss. That is expected within this week. It was actually supposed to happen, but there were some last-minute procedural issues between the insurance companies, which slightly delayed (the payment). So we are expecting around INR 60 crore within this week. And the main stock claim between INR 150 crore to INR 170 crore is expected before end of March 2026. That is around INR 210 crore which is expected here. In reference to the $20 million which we are expecting from Morita... That will be towards the end of current quarter and depending on the final timing, maybe either this year before March 2026 or a little bit in April 2026. But basically by Q1, we should receive money from there. And finally, the INR 150 crore by the Promoter. Our intention is to basically put the money before the end of March 2026... So we expect around INR 550 crore to come either in this year or in Q1 next year.

Guidance & targets

Revenue

  • Battery Chemicals Revenue Revenue · FY27 · High confidence INR 400-500 crore
    No, our guidance remains the same because, the guidance the expectation was that our Dahej site will be fully ready by June 2026 and our expectation that, we will start having sales of this from basically Q1 and majorly from Q2 onwards. So that remains the same. Therefore, our guidance does not change.

    — Dr. Harin Kanani

  • Dahej Salt-Related Revenues Start Revenue · Q2 FY27 · High confidence Q2 FY27
    So, I would say Dahej site should be fully qualified through several customers by June 2026, that is Q1, by the end of Q1, and sales should start in Q2.

    — Dr. Harin Kanani

  • Pakhajan Salt Sales Contribution Start Revenue · Q4 FY27 · High confidence Q4 FY27
    Pakhajan we are targeting in the second half, but our target would be to complete it by Q3 so that it starts contributing to the sales from Q4 in the next financial year.

    — Dr. Harin Kanani

  • Overall Revenue Run Rate Revenue · Next Financial Year · Medium confidence INR 950 crore+

    Previously INR 800 crore+ → INR 950 crore+

    But overall I think we will expect that as we go let us say this year, if you look at the run rate we are at around INR 800 crore-plus kind of a revenue and as we go from INR 800-plus to INR 950 crore or so.

    — Dr. Harin Kanani

Capacity

  • Dahej Plant Commissioning Capacity · Q1 FY27 · High confidence Q1 FY27
    Concurrently, construction of replacement plant of Dahej is progressing rapidly, with commissioning on track for Q1 FY27.

    — Dr. Harin Kanani

  • Pakhajan Electrolyte Commercial Production Capacity · H1 FY27 · High confidence H1 FY27
    Our Pakhajan greenfield project is progressing as per schedule, with commercial production for electrolyte targeted for H1 FY27

    — Dr. Harin Kanani

  • Pakhajan Electrolyte Salts Commercial Production Capacity · H2 FY27 · High confidence H2 FY27
    and electrolyte salts for H2 FY27.

    — Dr. Harin Kanani

  • Indian Battery Cell Installed Capacity Capacity · End of 2026 · High confidence 12 GWh
    And by end of this year, you should have 12 giga, if we say 12 giga and if the ramp-up happens okay, every month, for example, 1 giga kind of consumption should be reached by let us say end of December 26.

    — Dr. Harin Kanani

  • Indian Battery Cell Installed Capacity Capacity · End of 2027 · Medium confidence 40-50 GWh
    So, I think by end of 2027 we should be if everything goes well by end of 2027, we should be 40-50 giga plus entering into 2028 based on what customers have shared till now.

    — Dr. Harin Kanani

Operational

  • Dahej Site Qualification Operational · Q1 FY27 · High confidence June 2026
    So, I would say Dahej site should be fully qualified through several customers by June 2026, that is Q1, by the end of Q1, and sales should start in Q2.

    — Dr. Harin Kanani

Efficiency

  • Inventory Days Efficiency · End of FY28 · High confidence 140-160 days
    our inventories would be at around 140 to 160 days, is what we are targeting on the inventory side.

    — Dr. Harin Kanani

Capacity Utilization

  • Salt Capacity Utilization Capacity Utilization · Fully ramped up · High confidence 80%
    Normally salt would be at 80%. It is like a chemical plant.

    — Dr. Harin Kanani

  • Electrolyte Capacity Utilization Capacity Utilization · Fully ramped up · High confidence 100%
    In case of electrolyte, it is a formulation plant so you can go up to 100%.

    — Dr. Harin Kanani

Insurance Claims

  • Balance on Capital Rebuild Claim Settlement Insurance Claims · September 2026 · High confidence Before September 2026
    So that is something in my view, the first part the balance on the stock, I mean, sorry the balance on the capital rebuild should happen before September

    — Dr. Harin Kanani

  • Loss on Profit Claim Settlement Insurance Claims · September-December 2026 · High confidence Between September-December 2026
    and maybe the loss on profit should happen somewhere between September to December. So in a way, everything from the insurance ultimately hopefully should be achieved by September to December next year.

    — Dr. Harin Kanani

What to watch in Q4 FY26

Receipt of INR 60 crore Insurance Claim

Next quarter (Q4 FY26)
Current Expected within this week (Feb 12-18, 2026)
Target Claim received

Why it matters

This interim payment provides immediate liquidity and reduces the financial burden from the Dahej fire incident.

On the insurance front, we are very close to getting another INR 60 crore as a second interim payment against the rebuilding of Dahej plant, against the capex loss. That is expected within this week.

Risks & concerns

  • Transient Costs Impacting Profitability

    high

    Q3 EBITDA and PAT were pressured by costs from Neogen Ionics ramp-up, fire incident expenses, interim toll manufacturing, and higher finance costs. Management views these as short-term and expects insurance recoveries to balance them.

    Management acknowledged

  • Delays in Customer Approvals for Battery Materials

    medium

    The approval cycle for battery materials customers is lengthy, with some audits planned for March-May 2026 and meaningful shipments expected by Q1 FY27. Management maintains FY27 guidance, using Pakhajan sales as a backup for potential Dahej delays.

    Analyst acknowledged

  • Lithium Price Volatility

    medium

    The inorganic segment's downward trend was solely attributed to falling lithium prices. Management expects some positive impact in Q4 FY26 and more in FY27 if prices remain high, indicating sensitivity to commodity price movements.

    Management acknowledged

Q&A highlights

8 direct
Gross and Net Debt, Working Capital Trends Direct
The net debt that we have today is around INR 680 crore on standalone basis and around INR 1,175 crore on a consolidated basis. ... our inventories would be at around 140 to 160 days, is what we are targeting on the inventory side.

Provides specific debt figures and clarifies the strategy behind current inventory build-up for future capacity ramp-up.

Asked by Abhijit Akella

Timelines for Morita JV funds, Promoter Preferential Allotment, and Insurance Claims Direct
So we are expecting around INR 60 crore within this week. And the main stock claim between INR 150 crore to INR 170 crore is expected before end of March 2026... But basically by Q1, we should receive money from there [Morita $20M]. ... So we expect around INR 550 crore to come either in this year or in Q1 next year.

Crucial for understanding the company's near-term liquidity and funding for its expansion projects.

Asked by Abhijit Akella

Status of Salt Order Receipts and Approval Delays Direct
So, I would say Dahej site should be fully qualified through several customers by June 2026, that is Q1, by the end of Q1, and sales should start in Q2. And Pakhajan we are targeting in the second half, but our target would be to complete it by Q3 so that it starts contributing to the sales from Q4 in the next financial year.

Clarifies the revised timelines for commercialization and revenue generation from battery materials, addressing analyst concerns about delays.

Asked by Abhijit Akella

Reason for Dahej Capacity Addition Timeline Slip Direct
Our team had a training session with Morita team... And during that, they picked up some of the improvements which we could further do. So we are implementing that... so it went to March 2026.

Provides a clear explanation for the delay, indicating a focus on quality and optimization rather than unforeseen issues.

Asked by Abhijit Akella

Battery Chemicals Revenue Guidance for FY27 Direct
No, our guidance remains the same because, the guidance the expectation was that our Dahej site will be fully ready by June 2026 and our expectation that, we will start having sales of this from basically Q1 and majorly from Q2 onwards. So that remains the same.

Reassures investors that the ambitious FY27 battery chemicals revenue target is still achievable despite initial delays.

Asked by Rohit Nagraj

Neogen's USP as Primary Supplier for Electrolyte Salts Direct
I think one is we are already ready... Second, we have Mitsubishi collaboration... And the third is we have the backward integration. Fourth is we have actual capacity because one of the thing is you need to have the capacity. So right now we will have a 30 gigawatt hour worth of capacity...

Highlights the company's competitive advantages in the nascent Indian battery materials market, crucial for securing long-term contracts.

Asked by Meet Katrodiya

Base Business Revenue Growth in FY27 Direct
Yes.

Confirms management's expectation of double-digit growth in the core organic and inorganic chemical segments post-Dahej reconstruction, indicating confidence beyond battery materials.

Asked by Jason Soans

Pakhajan 30,000 MT Capacity Readiness and Utilization Direct
By end of H1, the way the plant is, we are doing a joint trial with Mitsubishi. So our idea is that the entire 30,000 MT, there are three lines and all the three lines would be tested and we would be ready for the 30,000 tons kind of annual capacity... Normally salt would be at 80%. It is like a chemical plant. In case of electrolyte, it is a formulation plant so you can go up to 100%.

Provides clarity on the operational readiness and expected utilization rates for the significant Pakhajan capacity, informing future revenue potential.

Asked by Jason Soans

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Detailed narrative

Q3 FY26 Performance and Profitability Headwinds

Neogen Chemicals reported a 9% year-on-year revenue growth to INR 220 crore in Q3 FY26, with gross profit increasing by 13% and a 150 basis points margin expansion. Despite this top-line strength, EBITDA stood at INR 32 crore and PAT at INR 4 crore, pressured by transient costs. These costs included ramp-up expenses for Neogen Ionics, elevated operational expenses due to a fire incident, interim toll manufacturing, and higher finance costs from the Dahej plant reconstruction. Management views these as short-term impacts, expecting insurance claim recoveries to balance them in coming quarters.

Strategic Expansion in Battery Materials via Morita JV

The company is making significant strides in its battery materials vertical, highlighted by a new joint venture, Neogen Morita New Materials Limited, with Japan's Morita Investment Limited. Neogen holds an 80% majority stake, with Morita investing $20 million for the remaining stake. This JV leverages 30 years of proven Japanese technology for LiPF6 salt production, positioning it as India's only non-FEOC compliant electrolyte salt plant. This alliance is expected to accelerate international customer approvals and production efficiency.

Pakhajan Greenfield Project Progress and Timelines

The Pakhajan greenfield project is progressing on schedule, targeting commercial production for electrolytes in H1 FY27 and electrolyte salts in H2 FY27. Plant equipment has arrived, assembly is underway, and trial production is expected shortly. The company has already secured long-term commercial supply approval from a prominent giga-scale Indian manufacturer and received provisional approval for lithium electrolyte salts from multiple global clients, with final site audits expected in Q1 FY27. The entire 30,000 MT capacity at Pakhajan is expected to be tested and ready by end of H1 FY27.

Funding and Liquidity Outlook

Neogen anticipates receiving approximately INR 550 crore by Q1 FY27 from various sources. This includes INR 60 crore in insurance claims expected this week, INR 150-170 crore for the main stock claim by March 2026, $20 million (approx. INR 160-170 crore) from the Morita JV by Q1 FY27, and INR 150 crore from a preferential issue to the Promoter Group by Q1 FY27. These funds are earmarked for completing capital projects and reducing working capital, providing significant financial flexibility.

Dahej Plant Reconstruction and Operational Efficiency

The reconstruction of the Dahej plant is rapidly progressing, with commissioning on track for Q1 FY27. The plant is expected to be fully available by the end of June 2026, leading to stable production from Q2 FY27. This transition from interim toll manufacturing to in-house production is projected to improve the company's cost structure. Dahej is also expected to contribute significantly to battery material sales from Q2/Q3 FY27, with the site anticipated to be fully qualified by several customers by June 2026.

Indian Battery Cell Manufacturing Capacity Growth

Management provided an optimistic outlook on India's battery cell manufacturing capacity, estimating around 12 gigawatt-hours (GWh) of installed capacity by the end of 2026 from players like Ola, Exide, and Waaree Energy. This capacity is projected to grow significantly to 40-50 GWh by the end of 2027, including contributions from Reliance, Amara Raja, and Tata. This robust growth in domestic battery production is expected to drive strong demand for Neogen's battery materials.

CDMO and Advanced Intermediates Performance and Outlook

The CDMO and advanced intermediates segments demonstrated resilience, performing slightly better than the previous year and maintaining levels despite the unavailability of the Dahej facility. The company expects these segments to be significant growth areas, contributing to an overall revenue run rate of INR 950 crore+ in the next financial year. Customer visits and new orders for these segments are anticipated from March 2026 onwards, indicating a strong pipeline for future growth.

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